New Law Significantly Expands Legal Basis for US Sanctions Against Russia

On 16 December 2014, President Obama announced that he will sign the Ukraine Freedom Support Act of 2014 (hereinafter the “Act”) into law. As discussed in our update dated 12 December 2014, the Act represents a potentially significant expansion of the scope of US sanctions against Russia as a result of the Ukrainian crisis. Most significantly, the Act extends applicability of certain US sanctions involving Russia and Ukraine to non-US persons.

Notwithstanding the broader applicability of the new sanctions contained in the Act, the law is less restrictive than prior drafts of the legislation, reflecting months of discussions between Congress, the business community, and the Obama Administration. For example, the Act would terminate when President Obama certifies to Congress that Russia has, among other actions, “ceased . . . undermin[ing] the peace, security, stability, sovereignty, or territorial integrity of Ukraine[.]” Previous drafts of the legislation required the President to make such a certification with respect to Ukraine, Georgia, and Moldova.

Approval of the Act by the Obama Administration reflects the view that while the sanctions introduced by the Act are significant, the Act nonetheless generally preserves the President’s flexibility to continue to coordinate Russian sanctions strategy with the European Union. Accordingly, most of the sanctions provisions described below are authorized, but not mandated, and include national security waiver provisions.

The Obama Administration has stressed that it is willing to roll back these (and other) sanctions if Russia takes steps to de-escalate the situation in the Ukraine. In this regard, Secretary Kerry told reporters in London on 16 December that Russia has made “constructive choices” and added “[t]hese sanctions could be lifted in a matter of weeks or days, depending on the choices that President Putin takes.”